Hon. Dr. Satish Chandra,J.
(Per: Hon'ble Tarun Agarwala,J.) The petitioner is a company incorporated under Indian Companies Act and is engaged in the business of manufacture of Steel Almirahs, Furnitures, Security items, M.S. components, Typewriters, Electronic goods, Fax Machines, office equipments, etc. For the assessment year 2001-02 under the Central Sales Tax Act, the Assessing Officer, after considering the material evidence on record, passed an assessment order dated 27.02.2004 imposing tax @ 2% on fax machines and photocopier machines holding them as electronic goods. Subsequently, it transpires that the Additional Commissioner issued an order dated 31.12.2007 granting permission to the Assessing Officer to initiate reassessment proceeding under Section 21(2) of the U.P. Trade Tax Act (hereinafter referred to as the Act) on the ground that photocopier machines and fax machines are liable to be taxed as an unclassified item @ 10%.
Based on this permission, the Deputy Commissioner, respondent no. 4 issued a notice under Section 21 of the Act. The petitioner, being aggrieved by the issuance of the notice and the order granting permission to the assessing authority to initiate re-assessment proceeding, filed writ petition no. 784 of 2008, M/s Godrej and Boyce Manufacturing Company Limited Vs. State of U.P. and others, which was allowed and the order of the Additional Commissioner sanctioning permission dated 31.12.2007 as well as the notice dated 03.03.2008 was quashed. The writ Court while allowing the writ petition by its order dated 29.03.2008 directed the Additional Commissioner to reconsider the matter. For facility, the order dated 29.03.2008 is extracted hereunder:
"After hearing learned counsel for the petitioner and the learned Standing Counsel and also considering the fact that the impugned order dated 31.12.2007 passed by the Additional Commissioner under Section 21(2) proviso is a non-speaking order which does not take into account the fact that earlier in the order passed under Section 22 exactly the same issue was considered and decided in favour of the petitioner and has also not considered the defence of the petitioner and the decision of this Court in the case of Canon India Private Limited Vs. State of U.P. & others reported in 2003 U.P.T.C.-10, we allow this writ petition. The impugned order dated 31.12.2007 (Annexure-7 to this writ petition) and all consequential proceedings pursuant to the impugned order are set aside. The matter will be reconsidered by the Additional Commissioner."
Based on the aforesaid observation of the writ Court, the Additional Commissioner issued a fresh notice dated 16.09.2008 intimating the petitioner to show cause as to why re-assessment proceeding should not be initiated. The petitioner submitted a reply contending that the tax liability is only 2% and not 10% and that the entire proceedings was barred by limitation inasmuch as the period of six years for reopening the assessment proceedings had lapsed. Inspite of the aforesaid objection being taken, the Additional Commissioner, by its order dated 21.10.2008, granted permission to the Assessing Officer to initiate reassessment proceedings under Section 21 of the Act. Based on the said order, the Assessing Officer issued a notice under Section 21 of the Act. The petitioner, being aggrieved by the aforesaid two orders, has filed the present writ petition for its quashing.
We have heard Sri Ashok Kumar, the learned counsel for the petitioner and Sri C.B.Tripathi, the Special Counsel for the State of U.P..
The learned counsel for the petitioner contended that the entire proceeding initiated under Section 21(2) of the Act was hopelessly barred by limitation. Further, on the merits of the case, the learned counsel submitted that the photocopier machines as well as fax machines are liable to be taxed @ 2%, which was duly considered by the Assessing Officer in the original assessment order. Consequently, the contention of the respondent that the photocopier machines and the fax machines are not electronic goods was nothing but a change of opinion. Consequently, in the absence of any reason, the entire proceeding was liable to be quashed.
On the other hand, the learned Special Counsel for the State of U.P. vehemently contended that once an order was passed by the writ Court setting aside the sanction granted by the Additional Commissioner under Section 21(2) of the Act, the period of limitation does not come in the way before the Assessing Officer in issuing a fresh notice. In support of his submission, the learned counsel has placed reliance on certain decisions, which will be referred hereinafter.
Under Section 21 of the Act, an assessment can be reopened within two years, but this period of limitation is extended to 6 years under the proviso to Section 21(2) of the Act. For facility, Section 21(2) of the Act including the proviso is extracted hereunder:
"21(2) Except as otherwise provided in this section, no order of assessment or re-assessment under any provision of this Act for any assessment year shall be made after the expiration of two years from the end of such year or March 31,1998, whichever is later:
Provided that if the Commissioner on his own or on the basis of reasons recorded by the assessing authority, is satisfied that it is just and expedient so to do authorises the assessing authority in that behalf, such assessment or re-assessment may be made after the expiration of the period aforesaid but not after the expiration of eight years fron the end of such year notwithstanding that such assess or re-assessment may involve a change of opinion.
In the light of the aforesaid provision, for the assessment year 2001-02, the extended period of limitation, being six years, comes to an end on 31.03.2008. When the first sanction was granted by the Additional Commissioner on 31.12.2007 admittedly, the said sanction was issued within the period of extended limitation. The writ petition was allowed on 29.03.2008 and the direction of the Court to the authority to reconsider the matter was to enable him to pass a fresh order within the period of limitation, which in the instant case was uptil 03.03.2008.
Having not passed any order prior to 31.03.2008, we are of the opinion that the period of limitation could not be extended after 31.03.2008 unless there was a specific direction from the writ Court exercising its plenary power to extend the period of limitation.
The learned Special Counsel has placed reliance upon various decisions to show that the period of limitation stands extended when a Court passes an order remanding the matter to the authority concerned. In support of his submission, the learned counsel has placed reliance upon paragraph 53, 54 and 55 of Grindlays Bank Limited Vs. Income Tax Officer, Calcutta & others, AIR 1980 SC 656, which are extracted hereunder:
"53. In the case of Grindlays Bank Ltd. v. Income Tax Officer, Calcutta and Ors. AIR 1980 SC 656 the Apex Court has held:
"Ordinary where the High Court exercises such jurisdiction it merely quashes the offending order and the consequential legal effect is that but for the offending order the remaining part of the proceeding stands automatically revived before the inferior court or tribunal with the need for fresh consideration and disposal by a fresh order. Ordinarily, the High Court does not substitute it own order for the order quashed by it. It is, of course, a different case where the adjudication by the High Court establishes a complete want of jurisdiction in the inferior court or tribunal to entertain or to take the proceeding at all. In that event on revivalat all. But although in the former kind of case the High Court, after quashing the offending order, does not substitute its own order it has power nonetheless to pass such further order as the justice of the case requires. When passing such orders the High Court draws on its inherent power to make all such orders as are necessary for doing complete justice between the parties. The interests of justice require that any undeservedor unfair advantage gained by a party invoking the jurisdiction of the court, by the mere circumstances that it has initiated a proceeding in the court, must be neutralized. The simple fact of the institution of litigation by itself should not be permitted to confer an advantage on the party responsible for it."
54. In the case of Director of Inspection of Income Tax (Investigation), New Delhi and Anr. Pooran Mall & Sons and Anr. (1974) 96 ITR 390 the Apex Court has held that even if the period of time fixed under Section 132(5) of the Act is held to be mandatory that was satisfied when the first order was made. Thereafter, if any direction is given under Section 132(2) or by Court in writ proceedings, as in the case, we do not think an order made in pursuance of such a direction would be subject to the limitations prescribed under Section 132(5) of the Act.
55. The aforesaid decision has been followed by the Madras High Court in the case Deputy Commissioner of Commercial Taxes Tiruchirapalli Division, Tiruchirapalli v. A. Abdul Shukoor and Co. (1977) 39 STC 137 wherein the Madras High Court has held as follows:
"The Supreme Court had occasion to consider a similar imitation prescribed in Section 132(5) of; the Income Tax Act. Under the provision, the Income Tax Officer had to make an order within a period of 90 days. Such an order was made by the Income Tax Officer in a particular case within the period of 90 days. The assessee filed a writ petition in the Delhi High Court, which set aside that order on the ground that the principles of natural justice had been violated and directed the Income Tax Officer to reconsider the matter afresh. When a fresh order was made after complying with the principle of natural justice, the assessee challenged it on the ground that the latter order was made beyond the period of 90 days prescribed under Section 132(5). The Delhi High Court accepted his contention and said that the order would have to be made within the period of 90 days and that the assessee was not estopped from contending against its validity. The Supreme Court in Director of Inspection of Income Tax v. Pooran Mall & Sons held that if once an order was made within a period of 90 days the subsequent order made in pursuance of an order of remand or direction by the High Court could be at any time."
Based on the aforesaid decision, a Division Bench of this Court in M/s S.K.Traders Vs. Additional Commissioner, 2008 U.P.T.C.392 held that if any direction is given by the Court in writ proceeding and thereafter an order is passed by the authority in pursuance of such direction issued by the writ Court, the same would not be subject to the period of limitation. We have perused these decisions and, we find that these decisions are totally distinct and distinguishable, which are not applicable in the instant case. In all these cases, the original order was passed by the authority within the period of limitation. When the writ Court allowed these writ petitions and a direction was issued, the period of limitation had expired. Consequently, the direction issued by the writ Court to reconsider the matter automatically extends the period of limitation.
This principle however, will not apply in the instant case, inasmuch as when the writ Court in the instant case had allowed the writ petition by its order dated 29.03.2008, the period of limitation was still existing. Consequently, the authority was required to pass a fresh order sanctioning permission to the Assessing Officer within the period of limitation. Since the same was not done, the sanctioning authority could not take advantage of these judgments. The period of limitation is not automatically extended unless ordered by the writ Court.
There is another aspect of the matter. Section 21 (3) of the Act provides that where the notice under sub-section (1) for any assessment year has been served within the period specified in sub-section(2), the order of assessment or re-assessment in pursuance thereof may be made within six months, from the date of issuance of such notice.
In the instant case one finds that even after expiry of the limitation on 31.03.2008 the permission granted on 21.10.2008 was beyond six months.
In view of the aforesaid, we are of the view that the permission granted by the Additional Commissioner by its order dated 21.10.2008 to initiate reassessment proceeding under Section 21 and consequential notice issued by the Assessing Officer dated 01.11.2008 was hopelessly barred by limitation and are quashed. The writ petition is allowed.
Dated: 21.07. 2014 MAA/-